European Commission (EC) officials came to Washington in May for a fifth round of aviation talks on transatlantic open skies filled with fire and brimstone, but went home with a new offer that clearly fell short of their expectations.
Europe's transport commissioner Loyola de Palacio announced on her arrival that without a deal granting market access, she would ask member states to consider renunciation of their existing bilaterals. "I am pessimistic," she said at the beginning of the week of talks. US companies, airline labour unions and the Bush administration "are afraid to open the market to competition", she claimed.
Condemning US "Jurassic aviation" policies, she said that access to the domestic market was hardly a radical demand. Perhaps, but it was too much for the USA, and she was able to call her pessimism justified.
At the end of the week, State Department chief negotiator John Byerly said: "We are not in a position at this time to change our cabotage laws, thus operations or access that would entail changes in the cabotage laws are not things we are able to look at this point." Byerly added that "there may be other things that can be done and that we will try to do, but we need an additional review to bring those matters to closure", without giving details.
In fact, the USA was poised to offer a liberalisation of leasing rules as a way to close the gap, according to EC officials. Chief EC negotiator Michel Ayral told reporters "that is one of the modalities under consideration, although we would have to study its commercial applications closely".
Ayral said that the two sides had made progress on 90% of the technical issues, safety and ground handling, for example. "But the most difficult part will be in the 10%," he said. The US side was unwilling to go beyond its last offer on ownership limits, a vow to seek a 49% cap from Congress and to keep the agreement dependent on passage of a law lifting the present 25% limit. Europe has a 49% limit on foreign ownership, and has said it will abolish that ceiling when Washington does.
One EC official said that Europe is willing to scale back its demands if the US commits to opening its markets in the future. In the short term, the EC would accept a right of establishment that would let European airlines operate in the USA, but would postpone the politically sensitive decision to open US airlines to foreign control.
As for de Palacio's warning on bilateral renunciation, Ayral would say no more. Byerly, ever the optimist, said: "It would be a shame, regrettable if actual renunciation came about" and insisted that the two sides could reach a deal before time runs out.
With US presidential elections coming up in November and de Palacio to vacate her position at the EC's transport directorate this autumn, few observers expect much firm progress this year.
DAVID FIELD WASHINGTON
Source: Airline Business
